UK Gilt Yields Rise on Inflation Fears, Political Uncertainty

2026-05-11 07:28 By Joana Ferreira 1 min. read

UK 10-year gilt yields climbed back above 4.95% as rising oil prices, driven by escalating tensions between the US and Iran, heightened inflation concerns and reinforced expectations of further Bank of England rate hikes.

Investors also continued to assess the fallout from last week’s UK local elections.

Brent crude surpassed $105 per barrel after President Trump dismissed Iran’s latest peace proposal as “totally unacceptable.” The fate of the Strait of Hormuz remains uncertain, as reports from The Wall Street Journal suggested Iran had offered to dilute some enriched uranium and transfer the remainder to a third country, a claim Iran denied.

Domestically, Prime Minister Keir Starmer is set to deliver a key speech on Monday aiming to reassure Labour MPs of his leadership amid heavy election losses and growing speculation of a potential challenge.

On the macro front, REC/KPMG data showed hiring for permanent positions in the UK falling at the fastest pace in three months in April.



News Stream
UK Gilt Yields Rise From Over Two-Month Lows
The yield on 10-year UK government bonds held just above 5.2%, recovering from lows not seen in more than two months, as investors assessed strong UK economic data. Oil prices also stabilized, with Brent crude regaining some ground following sharp declines in recent sessions. Data from the ONS showed that the UK economy expanded by 0.7% in the third quarter, accelerating from 0.5% growth in the previous quarter and matching market expectations. On an annual basis, growth accelerated to 1.9% from 1.4%, also in line with forecasts, while monthly GDP rose by 0.2% in September, exceeding expectations. The resilient data strengthened expectations of further Bank of England tightening, with markets pricing in another rate hike before year-end and a further increase by March. In the US, stronger-than-expected inflation and hawkish Fed commentary reinforced expectations of a December rate hike, while raising the possibility of a more aggressive 50-basis-point increase.
2026-11-12
UK Gilt Yields Steady as BoE Rate Hike Bets Intensify
The yield on 10-year UK government bonds stabilized around 5.2% following the previous session’s selloff, as investors assessed a quiet economic calendar and stronger-than-expected US inflation data, which reinforced expectations of further Fed tightening. Brent crude also paused its recent decline amid renewed shipping tensions in the Strait of Hormuz. Meanwhile, expectations of further BoE tightening have increased, with markets leaning towards another rate hike in December. Deputy Governor Clare Lombardelli warned that consecutive increases remain possible, highlighting persistent wage pressures and the risk of second-round inflationary effects. Investors are now increasingly pricing in another hike before year-end and a further increase by March, potentially putting renewed pressure on gilts. Investors are now turning their attention to UK third-quarter GDP report due Thursday.
2026-11-11
UK 10-Year Gilt Yield Rises
The yield on 10-year UK government bonds reversed its earlier decline, tracking US Treasury yields higher to reach 5.18%, as stronger-than-expected US inflation data and hawkish remarks from Federal Reserve Governor Christopher Waller fueled concerns over further monetary tightening. Waller signalled the possibility of additional interest rate increases, while October's stronger-than-expected US inflation reinforced expectations of further Fed tightening in December, bringing a potential 50-basis-point rate hike into focus. Meanwhile, Bank of England Deputy Governor Clare Lombardelli also signaled the possibility of further monetary tightening, warning that Britain's “low-hire, low-fire” labour market could make it more difficult to ease wage pressures. She noted that another interest rate increase in the near term was likely unless clearer evidence emerged of weakening inflationary pressures. Investors are now turning their attention to UK third-quarter GDP report due Thursday.
2026-11-10